Each construction project is unique; however, there is a commonality to the construction risks involved. Creating a comprehensive risk management plan will help to reduce future issues. Construction risks typically fall into two categories:
Planning Risks
Errors in blueprints or engineering plans may result in costly rework. Inadequate forecasting of real-world expenses can significantly impact the budget. Unplanned owner requests during the project can lead to scope creep, increasing both costs and timelines.
Production Risks
Insufficient site evaluation can result in unforeseen issues, such as undiscovered rock or old pipes, which require additional work. A lack of skilled workers or reliable subcontractors can delay progress, increase labor costs, or compromise quality.
Identifying Risk
The sooner risk mitigation begins, the better for the overall project. The team must identify potential risks and develop strategies to minimize their impact, leveraging collective experience. While not all risks can be eliminated, response plans are essential. Reviewing similar past projects can also help identify and address current risks.
The Cost of Construction Risk
Construction cost risks are events or conditions that may cause unexpected budget increases. These include sudden changes in the costof raw materials such as steel, wood, and concrete due to global market shifts or tariffs; shipping delays or factory shortages that halt work and increase costs; and general economic inflation that reduces the purchasing power of the project budget over time.
Reducing Risk
Once a potential risk is identified, rank it as high, medium, or low. Determine the necessary actions for each risk and address them in order of priority. High-risk issues should receive the most attention and resources.
Gundlach Champion has helped clients through the initial steps of a construction project to mitigate potential risk. The GCI team brings decades of combined experience to every commercial construction project, from new buildings to renovations.